Core Concepts

This page explains the ideas behind OddsZero in plain language. No code required — but links to exact details are provided throughout.

What is a prediction market?

A prediction market is a marketplace where people trade contracts that pay out depending on the outcome of a future event. The price of a contract acts as the market's estimate of the probability that the outcome happens.

• A "Yes" share trading at $0.70 means the market thinks "Yes" has a 70% chance.
• If "Yes" happens, each "Yes" share is worth $1.00. If it doesn't, it is worth $0.

By aggregating the beliefs of many traders, prediction markets often produce more accurate forecasts than any individual expert.

Outcomes and shares

Every OddsZero market has a list of outcomes (at least two). For each outcome the market issues shares.

• Binary market: outcomes ["Yes", "No"].
• Multi-outcome market: ["Democrat", "Republican", "Other"].

A share represents a claim on the collateral vault if its outcome wins. Only the winning outcome's shares are redeemable, and they are redeemed parimutuel pro-rata from the trader-staked collateral.

The Conditional Token Framework (CTF) "complete set" model

This is the heart of OddsZero's collateralization guarantee.

For every 1 unit of collateral that enters a market, the protocol mints exactly one share of every outcome. This unit is called a complete set.

So if collateral in the vault is C, there are n outcomes, and total shares minted across all outcomes is n × C. When the market resolves, exactly one outcome wins; each complete set contributes exactly one winning share. Therefore:

winning shares in circulation  ==  collateral in the vault

Winners are paid parimutuel pro-rata from the trader-staked collateral only: payout = floor(your_shares × win_refund_pool / total_winning_shares). The creator's seed is ring-fenced in a separate seed_vault and always fully refunded before winners are paid, so it can never be drawn on. If the market is heavily one-sided, winners are paid pro-rata out of other traders' stakes. Redemption is therefore always fully collateralized and the seed is never at risk.

Why fees never dilute backing

Fees (protocol + creator) are taken directly from the trader's payment and are never added to the collateral vault. Referral fees have been removed. The vault only ever grows by the "set cost" portion of a trade. This keeps the share backing invariant intact regardless of fees.

Collateral

OddsZero settles in a single stablecoin per market (USDC on Sui, 6 decimals). The contracts are generic over the coin type T via a typed Collateral<T> wrapper, but the production deployment uses native USDC.

• 1 share = 1 unit of collateral at resolution (1 USDC = 1,000,000 base units).
• The vault is the only source of redemption funds.
• The creator must seed the market with exactly 10,000 USDC (FIXED_INITIAL_LIQUIDITY). This seed is ring-fenced in a seed_vault and always fully refunded to the creator when the market closes or resolves. If a market is never resolved (oracle goes silent), anyone may recover the seed after ends_at + 30 days via reclaim_abandoned_seed.

Constant-product AMM

Trades are priced by a constant-product AMM that generalizes the classic binary x*y=k formula to n outcomes. The pool holds reserves of each outcome's shares. Buying shares of an outcome pushes its price up; selling pushes it down. The implied probability of an outcome is simply:

probability(outcome) = reserve[outcome] / total_reserves

See AMM & Pricing Math for the exact formulas.

Liquidity providers (LPs)

Anyone can seed or add collateral to the AMM pool and receive LP shares proportional to their contribution. LPs earn a slice of trading fees (the creator fee is paid to the creator, but the protocol fee flows to the treasury; see Fees). LPs take on "inventory risk": as prices move, the pool accumulates more of the now-favored outcome.

Oracles and resolution

A registered oracle proposes the winning outcome after the market closes. This opens a dispute window during which anyone can challenge the result by posting a bond. After the window, the outcome is finalized and redemption opens. See Resolution & Oracles and Disputes.

Price-backed markets

A special market type ("BTC Up/Down") resolves automatically against a real asset price at expiry — no human opinion involved. See Price-Backed Markets.

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